WASHINGTON - The Securities and Exchange Commission announced Wednesday that it has settled its civil litigation against Robert Bradbury, the former chairman and chief executive officer of the now defunct underwriting firm Dolphin & Bradbury Inc., and barred him from the securities markets.

The announcement comes just before Bradbury is to be sentenced Monday on related criminal charges tied to his selling unsuitably risky notes to four Philadelphia-area school districts without disclosing the risks.

Bradbury pleaded guilty in March in a federal court in Pennsylvania to one criminal count of securities fraud related to the selling of the notes, which were issued to finance a failed golf course and caused the school districts to lose more than $10 million.

The settlement with the SEC comes after the U.S. District Court for the Eastern District of Pennsylvania in Philadelphia on Nov. 30 issued a final judgment in the SEC's case against Bradbury and his firm that requires the former underwriter and his wife Margaret to disgorge $3.41 million of ill-gotten gains plus $1.73 million of prejudgment interest.

But those funds were determined to have been already paid in a settlement of charges that Bradbury and his wife reached with the four school districts - North Penn School District, Boyertown Area School District, Perkiomen Valley School District and Red Lion Area School District - to end litigation in a state court.
The school districts had filed lawsuits against the former underwriter and other transaction participants that were later consolidated.
The settlement of that litigation required Bradbury and his wife to pay more than $5 million to the districts.

The federal court in Pennsylvania permanently enjoined Bradbury and his firm from future securities law and Municipal Securities Rulemaking Board rule violations and barred him from serving as a director in a public corporation.

But the SEC Wednesday went further than the Nov. 30 order by the federal court by permanently barring Bradbury from associating with any broker, dealer or municipal securities dealer and revoking the SEC registration of Dolphin & Bradbury.

Though the firm has not done business in several years, its registration has yet to be revoked, SEC officials said.

From March 1999 through August 2004, Bradbury, who was financial adviser to the school districts, underwrote and sold them unrated bond anticipation notes for the Whitetail golf course, a speculative project located in Franklin County, Pa., without disclosing the risks the notes posed.

The Securities and Exchange Commission has ordered the now-defunct broker-dealer Dolphin & Bradbury Inc., and its former top executive, Robert J. Bradbury, to pay more than $1 million for violating the securities fraud laws by selling investors bonds based on offering documents that "recklessly" omitted critical information.

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The SEC found that the firm and Bradbury misled investors in connection with $75.4 million of bonds sold by Pennsylvania's Dauphin County General Authority in July 1998 to finance the purchase of the Forum Place office building in Harrisburg because the offering documents did not disclose that the building's largest tenant was leaving.

Dolphin & Bradbury underwrote the bonds.

The ruling comes as the Philadelphia-based broker-dealer, which was built up by Bradbury's father and which employed both Robert Bradbury and his daughter, Wendy, has been shut down, Robert Bradbury said Friday.The firm, however, still exists as a corporation and its application to withdraw its broker-dealer registration has been pending at the SEC since March.

Reached at his home Friday, Bradbury who owns 38% of the firm and had served as its chairman and chief executive officer, said he could not comment on the ruling or whether he might appeal it because he had not seen it yet.

But Bradbury's lawyer, Philip Kircher of Cozen O'Connor, said he would advise Bradbury to appeal because the finding of recklessness is not supported by the facts.Kircher said Bradbury told one investor about the PennDOT move and that there is reason to believe that the other investors knew about it.

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The SEC said that conduct by the firm and Bradbury with respect to the omission "constituted an extreme departure of the standards of ordinary care" and that this behavior violated federal securities law.The commission said also that Dolphin & Bradbury violated the Municipal Securities Rulemaking Board's Rule G-17 on fair dealing, and that Bradbury aided and abetted the firm in that violation.

The SEC ordered the firm to pay a civil penalty of $400,000 and to disgorge $313,995.31 in ill-gotten gains.Sources said the firm also would have to pay prejudgment interest on the disgorgement amount totaling about $210,000.The SEC ordered Bradbury to pay a civil penalty of $82,000.

Those penalties, which total over $1 million, were slightly less than what the enforcement staff had sought.The staff asked for a $550,000 civil penalty against the firm and aan $110,000 penalty against Bradbury.It had also asked that the firm and Bradbury both be required to disgorge ill-gotten gains and the administrative law judge set this amount at $482,560.50.

The SEC commissioners lowered the disgorgement amount to $313,995 to avoid imposing liability against the firm for bonds sold to Putnam Investments, which had been told by Bradbury about the PennDOT move.They lowered the civil penalties after determining the firm and Bradbury had no prior disciplinary history and that these amounts would be sufficient to deter misconduct by others.

The commission plans to put all of the money it receives from the case into a newly created "Fair Fund" so that it can be distributed to investors harmed by the violations.

In their ruling, the SEC commissioners noted that Bradbury and his lawyers had argued at a hearing last November that the offering documents were sufficient because they disclosed that the bonds, many of which were long-term, were backed by the revenues from short-term leases and there was no guarantee that the tenants would renew their leases.

But the SEC found that these disclosures were "not sufficient to render the omission of PennDOT's intended move immaterial."

Bradbury had also argued that it was not necessary to disclose PennDOT's planned move because local newspapers had publicly reported this information.The commissioners said, "publication of a few articles in local newspapers with limited circulation and discussion at DCGA meetings that were open to the public" do not make the information widely available publicly.

Lawyers for Bradbury arguing the case before the SEC had told the commission that while Bradbury might have been negligent, he was not reckless and did not engage in intentional wrongdoing.They said he told Putnam about the PennDOT move, arranged tours of the Forum Place building for investors and never attempted to restrict the flow of any information about the building.

The lawyers also claimed it would be unfair to find Bradbury was reckless when others involved in the transaction were not charged with any violations, except the DCGA, which settled charges of negligence with the SEC in April 2004.

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The SEC commissioners noted that Bradbury could not recall reviewing the official statement and never told his own counsel - the underwriters' counsel - about PennDOT's planned departure.They cited guidance issued by the SEC in 1988 and 1994 that states underwriters have "a duty to the investing public to have a reasonable basis for recommending any municipal securities, and [a] responsibility, in fulfilling that obligation to review in a professional manner the accuracy of statements made in connection with the offering.

"Moreover, we have observed that, when municipal securities professionals underwrite a bond offering, they impliedly represent to the investing public that they have a 'reasonable basis for belief in the truthfulness and completeness of the key representations made in any disclosure documents used in the offerings,' " the commissioners said.

"We cannot accept that someone with Bradbury's experience in municipal financing and with Bradbury's knowledge of PennDOT's intended move would fail to recognize that the intended move would be significant to investors and that the failure to disclose that move would render the information provided misleading," they said.

Robert Bradbury, who was chairman of the municipal-bond underwriting firm Dolphin and Bradbury Inc., was accused of improperly selling the notes, issued to finance a golf course in central Pennsylvania.

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The lawsuit was filed less than a month after the SEC upheld a $400,000 fine on Dolphin and Bradbury and ordered it to return more than $300,000 of gains.An $80,000 fine against Bradbury was also upheld.The firm and Bradbury were found to have been reckless in selling $75 million in tax-exempt municipal bonds in 1998.

In its latest case, the SEC said that Bradbury sold the golf-course notes to the school districts because there were no other buyers.Regulators said that Bradbury didn't disclose the risks of the golf-course notes, and said that the notes were inappropriate for school districts, which are limited to conservative investments.

An attorney for Bradbury was on vacation and couldn't be reached.

The SEC said that it is seeking to bar Bradbury from serving as an officer or director of a public company and to force him to give up improperly earned money.